Mergers and Takeovers

Freddie

Viacom 1994

JULY, 1994: After a bitter battle with Barry Diller, Viacom acquires Paramount for $10 billion, 25% more than originally planned.

SEPTEMBER, 1994 $8.4 billion Blockbuster merger is finished. Viacom immediately writes down about $318 million of tape inventory.

Viacom 1994

FEBRUARY, 1995: Viacom is now the No.2 entertainment company in the world. Thanks to accounting changes, Blockbuster reports huge gains in cash flow.

SEPTEMBER, 1995: Viacom narrowly dodges having to issue millions of new shares to compensate former Blockbuster holders.

NOVEMBER, 1995: Blockbuster founder Wayne Huizenga resigns from Viacom board.

Disney 1995

In the second-largest corporate takeover ever, the Walt Disney Company moved yesterday to create the world's most powerful media and entertainment company, announcing that it would acquire Capital Cities/ ABC Inc. for $19 billion.

Time Warner 1995

Ending a tumultuous five-week courtship, Time Warner Inc. and Turner Broadcasting System said yesterday that they would merge their sprawling operations, reinforcing Time Warner's position as the world's largest communications company.

Seagram 1995

Seagram in April 1995 sold its holdings in Du Pont, receiving about $11 billion in the process. The proceeds were almost immediately reinvested when Seagram later that month acquired 80% (later increased to 84%) of MCA, Inc. from Matsushita Electric Industrial Company, Ltd. for $5.7 billion. MCA--whose name Seagram changed to Universal Studios.

Westinghouse 1995

The Westinghouse Electric Corporation, an early broadcasting pioneer, said yesterday that it had agreed to pay $5.4 billion for CBS Inc., the last independent television network and once the crown jewel of broadcasting.

Seagram 1998

MONTREAL, November 4, 1998 – The Seagram Company Ltd. announced today that it has commenced its previously announced offer for all issued shares of PolyGram N.V. In the offer, each PolyGram shareholder may elect to receive for each PolyGram share NLG 115 in cash or Seagram shares based on an exchange ratio of 1.3772 Seagram shares for each PolyGram share.

Viacom 1999

Viacom Inc. and CBS Corp. announced a blockbuster $35.6 billion merger Tuesday, a move which is designed to bring the network of Dan Rather in touch with the MTV generation.

Vivendi 2000

French group "Vivendi Universal" has won the bid for the purchase of 35% of Maroc-Telecom capital for $ 2.33 billion (23.34 billion DH), it was officially announced on Thursday.

AT&T 1998

Hoping to return to the local telephone market and become a premier Internet player, AT&T Corp. unveiled plans Wednesday to acquire cable giant Tele-Communications Inc. in a blockbuster $48 billion deal.

AOL 2000

Goodwill is simply the difference between the price paid for a company during an acquisition and the net assets of the acquired company. The $128 billion of goodwill in this case was created when AOL and Time Warner merged in 2000.

Comcast 2002

Comcast Corp yesterday became the world's largest cable company, following its merger with AT&T Broadband, which was spun off from parent AT&T Corp yesterday as part of the $29.2bn deal. The new Comcast Corp has 21.4 million cable TV subscribers and is worth an estimated $60bn.

General Electric/NBC

The conglomerate pays the remaining $3.8 billion it owed under a $5.8-billion deal for the French firm's 20% ownership of NBC Universal.

Sony

The planned merger between music giants Sony and Bertelsmann (BMG) has been given the green light by the European Union, with no strings attached. The proposed marriage will leave four industry majors with about 80% of the world music market.

Date Acquiring Firm Acquired firm (new name in brackets)

Price (US $ billions) Strategic Motivation

1994 Viacom Paramount Communications 8.0 Conglomeration across publishing, film, broadcasting, cable, theme parks.

1994 Viacom Blockbuster 8.5 Distribution control.

1995 Disney Capital Cities/ABC 19.0 Vertical integration and control of content creation.

1995 Time Warner Turner Broadcasting 7.4 Vertical integration and conglomeration/synergy.

1995 Seagram MCA (Universal) 5.7 General conglomerate moves into broadcasting.

1995 Westinghouse CBS 5.4 General conglomerate moves into broadcasting.

1999 Carlton United 8.0 Merger of European media groups.

1998 Seagram PolyGram 10.6 Recording market share plus European film interests.

1999 Viacom CBS 22 Media conglomerate consolidates broadcasting power.

2000 Vivendi Seagram/Universal 35 Very diversified European leisure conglomerate diversifies further.

1998 AT&T TCI (Including Liberty Media) 48 Telecoms and media convergence.

2000 AOL Time Warner (AOL Time Warner)

128.0 Internet service provider merges with media conglomerate.

2002 Comcast AT&T Broadband 47.5 Cable company expands via acquisition.

2003 General Electric/NBC Vivendi Universal (NBC Universal)

5.5 ‘Merger’ between two media giants, but NBC the dominant partner.

2003 Sony BMG (Sony-BMG) Music arms of two majors merge.

Vertical & Horizontal Integration

Vertical integration is the process in which several steps in the production and/or distribution of a product or service are controlled by a single company or entity, in order to increase that company’s or entity’s power in the marketplace.

Much more common and simpler than vertical integration, Horizontal integration (also known as lateral integration) simply means a strategy to increase your market share by taking over a similar company. This take over / merger / buyout can be done in the same geography or probably in other countries to increase your reach.

Vertical Integration Example

An example of vertical integration, among contemporary entertainment firms, can be found with major record labels owning the distributors of their physical music. UMG owns UMGD and independent distributor Fontana, Sony owns Sony Music Distribution and independent distributor R.E.D., Warner Music Group owns WEA and indie distributor ADA, and EMI owns EMI distribution.

Horizontal Integration Example

Disney, which creates movies and television shows, uses the characters to create toys and market other products to kids, etc. would be an example of horizontal integration. (Note that Disney uses other companies to do some of the work on the movies and TV programs, to manufacture the toys, etc and so is not vertically integrated.)

Public Service Broadcasting & Ofcom

Informing, educating & Entertaining Since 2009

Lord Reith was a Scottish broadcasting executive who established the tradition of independent public service broadcasting in the United Kingdom. In 1922 he was employed by the BBC as its General Manager; in 1923 he became its Managing Director and in 1927 he was employed as the Director-General of the British Broadcasting Corporation created under a Royal Charter. His concept of broadcasting as a way of educating the masses marked for a long time the BBC and similar organizations around the world.Reith summarized the BBC's purpose in three words: educate, inform, entertain; this remains part of the organisation's mission statement to this day.

Lord Reith (1889-1971)

Founder of the BBC

Public Service Broadcasting (PSB)

The United Kingdom has a strong tradition of public service broadcasting. In addition to the BBC, established in 1922, there is also Channel 4, a commercial public service broadcaster, and S4C, a Welsh-language broadcaster in Wales. Furthermore, the two commercial analogue broadcasters ITV and Channel 5 also have significant public service obligations imposed as part of their licence to broadcast.

Cross-media ownership

Concentration of media ownership (also known as media consolidation or media convergence) is a process whereby progressively fewer individuals or organizations control increasing shares of the mass media. Contemporary research demonstrates increasing levels of consolidation, with many media industries already highly concentrated and dominated by a very small number of firms

Diversification

Based on the undisputed merits of social, political and cultural pluralism, diversity.And variety in the media is desirable ends in themselves.

Digital broadcasting

Digital broadcasting is the practice of using digital data rather than analogue waveforms to carry broadcasts over television channels or assigned radio frequency bands. It is becoming increasingly popular for television usage (especially satellite television) but is having a slower adoption rate for radio.

Satellite broadcasting

Satellite television is television programming delivered by the means of communications satellite and received by an outdoor antenna, usually a parabolic reflector generally referred to as a satellite dish, and as far as household usage is concerned, a satellite receiver either in the form of an external set-top box or a satellite tuner module built into a TV set. Satellite TV tuners are also available as a card or a USB peripheral to be attached to a personal computer. In many areas of the world satellite television provides a wide range of channels and services, often to areas that are not serviced by terrestrial or cable providers.

Product Diversity and Profitability

Garnham Says...

“…risk derives from the fact that audiences use cultural commodities in highly

volatile and unpredictable ways, often in order to express that they are different

from each other”

Our Own Habits

Nearly 30,000 albums were released in the USA in 1998, of which fewer than 2% sold more than 50,000 copies.

Due to such high popularity in music during this period (perhaps even more so now), people are more inclined to buy music by artists and bands that are already well recognised. This means when new musicians with new styles of music come into the scene, they may find it harder to gain recognition if it doesn’t match a large audiences expectations.

Recent Music

However, during recent times. People have began to like and listen to styles of music to differentiate themselves from other people. Ranging from dubstep to the re-introduction of reggae. Due to this, it means that producing new music for a profit can become harder; ‘risky business’.

Films

Similar to music, films that get released are regualrly judged on previous works by either the actors, directors or sequels. A good example is the release of the new James Bond film, ‘Skyfall’. A large majority of viewers of the film will have seen the film due to the previous Bond films and possibly the actor. Not to mention the fact it was released on Bond’s 50th anniversary. Seemingly a very ‘unrisky’ film. However, taking away the anniversary and people involved with the film, its success would have been completely different.

Minimising Risks

Horizontal integration within media buys up competition, whereas vertical integration lowers production costs. Multisector and multimedia integration allows for cross-promotion.

Larger companies are able to spread risks in way that smaller companies are unable to do.

Acts

PRIVACY LAWPrivacy in English law is a rapidly developing area of English law that considers in what situations an individual has a legal right to informational privacy, that is to say the protection of personal (or private) information from misuse or unauthorized disclosure. Privacy law is distinct from those laws such as trespass or assault that are designed to protect physical privacy. Such laws are generally considered as part of criminal law or the law of tort. Historically, English common law has recognized no general right or tort of privacy, and was offered only limited protection through the doctrine of breach of confidence and a "piecemeal" collection of related legislation on topics like harassment and data protection. The introduction of the Human Rights Act 1998 incorporated into English law the European Convention on Human Rights. Article 8.1 of the ECHR provided an explicit right to respect for a private life for the first time within English law. The Convention also requires the judiciary to "have regard" to the Convention in developing the common law.

The European Convention on Human Rights (ECHR)

ECHR is an international treaty to protect human rights and fundamental freedoms in Europe. Drafted in 1950 by the then newly formed Council of Europe, the convention entered into force on 3 September 1953. All Council of Europe member states are party to the Convention and new members are expected to ratify the convention at the earliest opportunity.

Licensing act 2003 and LA

They licensing act 2003 and LA have been prepared by the Department for Culture, Media and Sport in order to assist the reader of the Act. In April 2000 the Government published an act on reforming alcohol and entertainment licensing set out proposals for modernizing and integrating the alcohol, public entertainment, theatre, cinema, night café and late night refreshment house licensing schemes in both England and Wales.

Official Secrets Act 1989Secrets 1 – Security and IntelligenceAn offence of disclosing information, documents or other articles relating to security or intelligence.

Secrets 2 – DefenceAn offence of disclosing information, documents or other articles relating to defence. This section applies only to crown servants and government contractors.

Secrets 3 – International relationsAn offence of disclosing information, documents or other articles relating to international relations. This section applies only to crown servants and government contractors.

Section 4 - Crime and special investigation powersThis section relates to disclosure of information which would assist a criminal or the commission of a crime. This section applies only to crown servants and government contractors.

Section 5 - Information resulting from unauthorised disclosures or entrusted in confidenceThis section relates to further disclosure of information, documents or other articles protected from disclosure by the preceding sections of the Act. It allows, for example, the prosecution of newspapers or journalists who publish secret information leaked to them by a crown servant in contravention of section 3. This section applies to everyone.

Libel Law

There are two versions of defamation, libel and slander. Libel is when the defamation is written down (including email, bulletin boards and websites), and slander is when the incident relates to words spoken. In the UK, if someone thinks that what you wrote about them is either defamatory or damaging, the onus will be entirely on you to prove that your comments are true in court.

The Race Relations Act

The Race Relations Act 1976 was established by the Parliament of the United Kingdom to prevent discrimination on the grounds of race.Items that are covered include discrimination on the grounds of race, colour, nationality, ethnic and national origin in the fields of employment, the provision of goods and services, education and public functions.The Act also established the Commission for Racial Equality with a view to review the legislation, which was put in place to make sure the Act rules were followed.

The Broadcasting Act 1990This broadcasting act has to some extent been superseded by the Government's White Paper on Communications, because anything taken from that paper will be turned into a new Act of Parliament. However, this Act began the first steps to deregulation in British Broadcasting and reversed restrictions imposed on ownership of ITV franchises. The main points of the 1990 Act were:

• This act required all ITV franchises to be put up for sale and to be awarded partly on financial grounds.

• New ITV regional franchises mandated to give 25% of their production to independent producers.

• ITV network centre established to commission programmes from the franchise holders on to the national ITV network.

• Independent Television Commission set up to regulate all TV services in the UK, with the exception of the BBC.• For first time Channel4 to sell own advertising and ITV monopoly on advertising sales was lost.

• Channel 5 was last conventional terrestrial TV channel to set up in 1997 before digital explosion, to provide same strand of programming at the same time every day, each week.

• TV licence is a tax on all owners of a TV set. Fee set by government and to be renewed by an Act of Parliament.• Corporation's right to be funded by licence fee renewed, but situation insecure.

• BBC set up internal market as Producer Choice, where producers must also be managers and shop around for cheapest facilities rather than accept those providing by corporation itself.

• Discusses different ways of paying for TV viewing as things are changing, ie. pay per view and subscription.

• The Broadcasting Act 1990 is a law of the British parliament, often regarded by both its supporters and its critics as a quintessential example of Thatcherism. The aim of the Act was to reform the entire structure of British broadcasting; British television, in particular, had earlier been described by

Effects of the ActAn effect of this Act was that, in the letter of the law, the television or radio companies rather than the regulator became the broadcasters, as had been the case in the early (1955-1964) era of the Independent Television Authority when it had fewer regulatory powers than it would later assume.

In TelevisionIn television, the Act allowed for the creation of a fifth analogue terrestrial television channel in the UK, which turned out to be Channel 5, and the growth of multichannel satellite television. It also stipulated that the BBC, which had previously produced the vast majority of its television programming in-house, was now obliged to source at least 25% of its output from independent production companies.